Bonds

Bond is a bedt security issued by the government or cooperations. Bonds that are issued by the
government there is a risk-free rate. That means when we invest in government bonds there is no risk.
But when we invest in corporate-bonds we have to face risk. Because corporate bonds usually have
higher interest rate when compare with government bonds. Credit risk and interest rate risks are the
risks that investors have to face when they invest in bonds.

When we are investing bonds, it provides income. It is not unstable cash stream. Also there are so many
reasons investors choose bonds to invest.

Assumptions that we use when we invest in bonds.

01.There is no any effects by inflation in our country.

02.There is no any changes in government rules and regulations regarding interest rate.

Bonds offer a steady stream of income. Bonds typically pay interest twice per year. Bond investments
can both create interest income and capital preservation if they are kept to maturity, at which point
bondholders will receive their whole principle investment back.

Bond interest rates are often greater than the rates that banks offer on savings or certificate of deposit
(CD) deposits. Additionally, unlike bank deposit products, which are FDIC guaranteed, bonds contain
credit risk. The danger is therefore greater than with bank deposits.

As our client is young and he likes to take risk and get high returns, we invested more money in bonds
than in bank deposits.

Bonds have less risk than stocks. Also, stocks have higher returns than bonds. Because of this,
according to our client, he expects a high return and likes to take risk, so he decided to invest less
money in bonds than we invest in stocks. Accordingly, we decided to invest 3 million in bonds.

After talking with our client we came to a conclusion to buy the bonds of NSB fund management
company limited. The reason is that NSB bank offers high interest rate and our client is a risk taker so he
agreed to invest there.

Accordingly, we decided to buy the 3 year bond of NSB fund management company limited.

There we arranged to buy Bonds for 1 million each on 3 occasions. This allowed us to buy bonds at an
even higher interest rate and get a higher return.